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Sustainability Trends in Irish Businesses

Irish businesses are increasing their focus on sustainability according to the latest EY Ireland’s State of Sustainability report, as an increased understanding of sustainability, its impact on the bottom line, and a desire to create a more sustainable business approach becomes embedded across the economy.

At a time of growing scrutiny around transparency and authenticity of sustainability credentials, business leaders are also reporting a rise in concern around accusations of greenwashing, as well as increased prioritisation of sustainable practices by investors in the capital markets, directly linking ESG performance with financial opportunity.

The report, which surveyed 200 senior sustainability decision-makers across the public and private sector in Ireland, reveals that 81% of respondents report a heightened focus on sustainability over the past year, a 19% increase from the last survey in 2022. This is the largest percentage increase noted in the study, indicating that Irish businesses are now making a significant commitment to sustainability. The findings suggest progress is being made by Irish businesses when it comes to sustainability, as 74% of respondents rate their efforts on sustainability as ‘established or better’, a rise from 61% in 2022, and 15% consider their efforts ‘industry leading’, doubling from 7% in 2022. However, 35% of respondents feel their organisation is not doing enough, a notable rise from 17% in 2022, showing that there is still more to do.

Meanwhile, awareness of the negative impact and reputational risks of misleading sustainability claims is growing as 35% of respondents indicate that fear of greenwashing influences their communication strategies, a significant increase from 13% in 2022.

Key sustainability motivations

Increased stakeholder interest, regulations, and perceived bottom-line benefits are key motivating factors driving sustainability in organisations. Almost two thirds (65%) of businesses reported wider stakeholder enquiries about sustainability impact, up from 49% in 2022. More than half (58%) believe demonstrating a greater commitment to sustainability is necessary for them to get access to capital and 36% of businesses are looking to improve their position on sustainability by merging with or acquiring another company. Interestingly, almost a third (30%) indicated they are increasingly assessing the sustainability status of target companies when considering a merger or acquisition.

Derarca Dennis, EY Ireland Partner and Sustainability Services Lead says: “It’s very encouraging to see a shift amongst Irish businesses towards a better understanding of sustainability, its impact on the bottom line, and a real desire to create a more sustainable business approach across all sectors. The findings show the link between sustainability and profitability is increasingly influencing the corporate strategies of Irish organisations, including how they approach mergers and acquisitions. As companies embrace this agenda, it’s vital they engage with all stakeholders to create a more resilient and sustainable business.”

Regulatory concerns

Negotiating a path through complex new and existing EU regulations is the leading sustainability-related concern for organisations with the EU Emissions Trading System cited as a cause for concern by almost two-thirds (65%). That is followed by supply chain due diligence (62%), likely driven by the Corporate Sustainability Due Diligence Directive (CSDDD). More than half (54%) of respondents were concerned about the EU Deforestation Regulation, which has far-reaching implications for what can and cannot be produced or sold within the EU, and plastic packaging-related measures were cited by 46%, relating to the Packaging & Packaging Waste Regulation (PPWR).

The regulation which is of the least concern is the Corporate Sustainability Reporting Directive (CSRD), cited by just 15%. This is likely because many organisations believe they are prepared to meet CSRD and International Sustainability Standards Board (ISSB) reporting obligations. 52% said they are either very prepared or have established reporting practices in place, while just 10% said their organisations are not prepared at all.

Supply chain responsibility

Sustainability regulations such as CSRD and CSDDD are designed to make organisations more sustainable by making them responsible not only for their own impacts but also for those of their supply chains, so it is not surprising to see that 62% of respondents cite supply chain due diligence as their biggest sustainability-related concern.

Levels of engagement with supply chain suppliers on ESG reporting by organisation varies. 26% have not engaged with their supply chain on ESG reporting at all to date, while 19% of businesses have had initial conversations and 17% have had advanced discussions about the importance of collaboration.

Encouragingly half (50%) of all organisations have technology solutions in place to gather data from their supply chains for compliance purposes while 32% have systems to gather information in order to assess the ESG performance of their supply chains.

Derarca Dennis says: “Given the growing demands of regulators, investors and consumers for sustainable supply chains, organisations that have not yet started engaging and collaborating with their supply chains run the risk of being left behind. We need to continue to see more organisations having advanced discussions with suppliers and putting sustainability reporting systems in place. Technology will have a critical role to play in supply chain engagement. Vast amounts of data from disparate sources will need to be collected, curated, analysed, and put into a form that meets regulatory standards. There is a huge opportunity for companies that want to get sustainable procurement right.”

EY launches Global Sustainable Finance Innovation Hub in Dublin to accelerate ESG progress for financial firms

EY today announces the launch of a new Sustainable Finance Innovation Hub in Dublin to help financial institutions around the world accelerate their efforts to meet their environmental, social and governance (ESG) regulatory and reporting requirements.

EY Ireland’s existing financial services sustainable finance team will more than triple in size over the coming months with an additional 40 specialist hires planned to span the three pillars of ESG. The new hub, which will be led by EY Ireland Financial Services partner Sean MacHale, is projecting double digit growth over the next twelve months as it ramps up to meet growing client demand around the world.

The Dublin hub will be augmented by a network of individuals with deep sustainability expertise across Europe, Asia-Pacific and the US, who will come together to deliver the latest thinking and advice to clients on ESG reporting, with a particular focus on the areas of biodiversity & nature, EU regulation, international goals, among others.

Colin Ryan, EY Ireland Financial Services Country Lead, comments: “The financial services sector plays a central role in the transition to a more sustainable future and we are now significantly expanding our capacity to deliver end-to-end sustainable finance transformation services to clients in the sector. The addition of 40 specialist hires across the three pillars of ESG will see our Dublin hub become a globally significant centre for innovation in the area of sustainable financial services. The sector must comply with an increasing volume of regulatory requirements over the coming years, and many firms already face multiple deadlines this year alone. Our new hub will support firms to more effectively report on their activity and will help clients ensure that they remain compliant with the evolving regulatory environment.”

Sean MacHale, EY Ireland Partner and Financial Services Sustainable Finance Leader, says: “The requirement for tangible progress on ESG matters in the financial sector has intensified of late. Firms face pressing regulatory reporting and disclosure demands and must demonstrate transparency and accountability when it comes to the progress they are making towards Net Zero goals and positive environmental impacts in a socially inclusive manner”.

“Managing the global flow of capital means the financial sector has a unique ability to drive material positive change, and we are really proud to support firms on their continuing ESG journey.”

Fidelma Clarke, Financial Services Risk Consulting Partner, comments: “With so much activity in the area of sustainability reporting right now, it’s important that our clients have the resources they need to keep pace. We are delighted to be strengthening our long-standing commitment of delivering positive change”.

Shaun Carazzo, EY EMEIA Financial Services Climate Change and Sustainability Leader, adds: “Sustainability is a top agenda item for all financial services firms worldwide, and covers individual Net Zero transition plans all the way to the development of greener services and products. Our innovation hub demonstrates EY’s commitment to the ESG agenda and will build on our already market-leading sustainable finance advisory business. By bringing the EY network of sustainable finance talent together, we can offer a one-stop-shop to clients, and I look forward to building out the hub as we respond to demand.” 

Momentum on Sustainable Energy Transition at Risk as Consumer Fatigue Sets In

As the sustainable energy transition enters a crucial new phase, momentum is at risk of slipping amongst Irish and global consumers. While households say they are more interested than ever in sustainability and the potential of a clean energy future, only three in ten (30%) feel they can do more at this time to be more sustainable. With 70% of the expected benefits of the energy transition to be driven by changes in consumer consumption, and at a time when energy prices are beginning to decline, reengaging households is key.

That’s according to the latest EY ‘Energy transition consumer insights’ report, which surveyed 23,000 residential energy consumers across 21 countries, including 1,042 in Ireland, and which also highlights the key role the energy providers can play in helping to close the gap between interest and action amongst consumers on energy sustainability.

In Ireland, 78% of consumers say they are doing as much as they can to be sustainable at this time. When it comes to shifting to cleaner sources of energy, the majority of Irish households say energy providers (57%) and Government (57%) should take the leading role, with just over one in five (21%) believing individual consumers should be leading. The global energy crisis and cost of living challenges continue to impact Irish households, with 69% of Irish consumers saying they can’t absorb a bill increase of 10%.

The research also identifies a generation gap when it comes to the sustainability premium of energy amongst Irish consumers – with Gen Z (32%) and Millennials (20%) willing to pay a premium for sustainable energy solutions, significantly ahead of Gen X (14%) and Boomers (15%).

Sean Casey, EY Energy & Infrastructure Consulting Leader says:

“After a number of years of spiking energy prices due to the conflict in Ukraine, combined with cost-of-living challenges facing many, it’s not surprising that Irish households feel that they are not in a position to do more on energy sustainability. Our research finds that the majority of Irish consumers say that they’ve already done everything they can, with only three in ten feeling they can do more to be more sustainable.

“This presents a significant challenge as we move into the next critical phase of meeting our ambitious but essential climate change commitments. While efforts on the supply side from producers are gaining momentum, with record renewable energy generation on the grid, we need an even more fundamental shift in how we engage and encourage sustainable energy consumption behaviours, as 70% of the outcome of the energy transition depends on people changing their behaviour, most notably how we power our homes and how we get around.

“With energy prices beginning to decline from the spikes of late 2022 and early 2023, there is now a window of opportunity in terms of promoting and incentivising sustainable energy behaviours at a household level. Energy consumers need a broad range of supports to make personal energy choices easier and more affordable. These supports are in such areas as renewable energy solutions for the home, electric vehicles and simply how consumers use energy every day. Closing the gap between their interest and action will depend on energy providers, government, and the broader energy ecosystem working together to pull every lever available.”

The Action-Reaction Paradox

The EY research also delved into consumer behaviours when it came to energy usage, finding that households are often undermining their own positive sustainability actions – in many cases without being aware of it. This behaviour is not uncommon and referred to by researchers as the ‘action-reaction paradox’.

More than seven in ten (72%) Irish consumers report they offset their positive energy actions with negative actions and behaviours. These can include replacing an appliance/device with a new one and continuing to also use the old one (21%), the increased use of a new appliance/device because it costs less to operate than the one it replaced (28%) or taking an action or making a purchase that helped reduce energy bills and using the savings to buy something else (31%).

Sean Casey says, “Our research finds that even when Irish households take action to increase their energy sustainability, they can sometimes offset the gains – frequently unknowingly – by undertaking another energy intensive action. This challenge is compounded by the fact that the consumption of a good or service often increases as prices fall – meaning that the rapid gains in terms of sustainable energy entering the grid in the past decade will be outweighed by increased energy demand overall. It’s imperative therefore that we redouble efforts to educate and support households to reduce energy use where possible. This can include switching to renewable energy – which is increasingly available without a premium – or to switch to dynamic plans that incentivise usage outside of peak periods of demand.”

Opportunity for Energy Providers

While 81% say that it’s the energy provider’s responsibility to be sustainable and offer sustainability options to consumers, usefully providers are Irish consumers’ most trusted source of guidance on energy sustainability and purchasing energy products and services (44%). This gives these companies a significant opportunity to play an increasing role in powering the next stage of the energy transition.

Kyle Kirkpatrick, EY Ireland Customer Strategy and Transformation Lead says: “Our research tells us there is a real opportunity for energy providers to act as trusted advisors to householders – making change easier, faster, broader and deeper. Consumers are becoming more comfortable with new technologies being part of their energy experience – including the use of AI and Generative AI to help provide personalised advice and information about new energy solutions, and these technologies can play an increasingly important role in enabling consumers. One thing is clear: a collaborative, holistic approach to the energy transition, with consumers at the core, is how we will accelerate progress toward a fairer, greener, and better energy system that delivers more value for everyone.”

Find out more here.

CEOs forecast increase in revenues, profits and deal making in 2024, as AI adoption moves up the agenda

CEOs around the globe are optimistic about their ability to drive revenue growth and profitability in 2024 despite global economic challenges, according to the latest EY CEO Outlook Pulse survey.

The EY quarterly survey of 1,200 global CEOs on their prospects, challenges and opportunities, shows they are bullish on business performance for 2024 with a significant majority expecting an increase in revenue growth (64%) and profitability (63%).

Furthermore, 41% of Global CEOs, say they will be prioritising widespread adoption of AI technologies to drive efficiencies and improve business performance, while three in four (76%) agree the technology will have little impact on revenue growth at this time, viewing it as a strategic necessity rather than an immediate driver of revenues.

The optimism for success comes despite acknowledgement of a continued challenging macroeconomic environment with three-quarters (76%) of CEOs surveyed expecting the global economy to continue to endure low or no growth and over half (57%) forecasting an increase in the cost of business.

Graham Reid, Head of Tax & Law and Clients & Markets at EY Ireland, says:

“Even though CEOs are expecting slower growth in the global economy, this hasn’t dampened their confidence. Mirroring trends that we are seeing here in Ireland CEOs globally are seeking opportunities to drive efficiencies, transform their business for growth and to harness the potential of Artificial Intelligence. While Ireland’s economy has not been immune to global macroeconomic trends over recent years, businesses here – whether indigenous or multinational – have handled this uncertain trading environment remarkably well and are now looking ahead with increasing confidence to the future.”

 

Lift-off for deals market in 2024

CEOs are anticipating a deals market bounce-back with eight in 10 (79%) respondents predicting an uptick in mergers and acquisitions (M&A) megadeals above US$10bn. Thirty-six percent of respondents are also actively pursuing M&A transactions over the next 12 months and a further 29% are seeking divestments. The US maintained its position as the most attractive target region in terms of M&A activity followed by Japan, the United Kingdom, China and India. Manufacturing was identified as the top sector for M&A deals closely followed by ‘banking and capital markets’, ‘insurance’, ‘consumer products’ and ‘mobility’ rounding up the top five.

This quarter, the survey also captured the perspectives of 300 private equity (PE) leaders across more than 20 countries, regarding their investment and portfolio management outlook. Mirroring CEO sentiment, the majority of surveyed PE leaders (71%) also predict an uptick in megadeals. Seventy percent of surveyed PE leaders predict an increase in corporate divestment or carve out activity in 2024, signifying a more buoyant deals market than seen in the previous year.

Graham Reid says, “Many CEOs globally are revisiting their business transformation plans, scanning for smart investments and laying the groundwork for potential alliances as the M&A market now begins to show signs of recovery.”

Transformation plans speed up, with a focus on efficiencies 

Underpinning the rise in CEO confidence is a rush toward strategic transformation, 58% of CEOs surveyed are accelerating their business transformation agendas – a significant leap, almost tripling from 21% in July 2023. In stark contrast, only 5% now report having no transformation plans, a fall from 37% in July 2023. Nevertheless, despite the bullish sentiment, CEOs are demonstrating pragmatism in their approach to business transformation. Primary focus areas include efficiency enhancements and cost management strategies.

Graham Reid says, “If 2023 was the year of transition as organisations grappled with a series of crises, 2024 is shaping up to be the year of action. With an acceptance that the costs of doing business are unlikely to fall to pre-pandemic levels, we’re seeing a shift in how CEOs approach business transformation, balancing optimism with pragmatism and focusing on efficiency and cost management.”

Geopolitical risks take centre stage in bumper year for elections

With over half of the world’s population going to the voting booth over the next 12 months, CEOs are acutely aware of geopolitical risks and the potential business impact. Over three-quarters of those surveyed (78%) are worried about the potential rise of populist movements to increase geopolitical uncertainty and create business challenges. Seventy-six percent of respondents were also concerned about the political misuse of AI in major 2024 elections.

While many CEOs feel confident about their organisation’s ability to integrate geopolitical turbulence into their decision-making, nearly half (48%) of respondents believe there is room for improvement in their defined and active processes for managing geopolitical risks. In fact, 98% of CEOs and PE leaders surveyed are having to make alterations to their investment plans including exiting certain businesses (32% of CEO respondents and 38% of PE respondents) or delaying a planned investment (42% of CEO respondents and 32% of PE respondents).

Graham Reid says, “The influence of the political world on the corporate world is as strong as ever, but this year we’re seeing another risk emerge – the rise of AI in political campaigning and the potential for its misuse. CEOs are well aware of the need to integrate geopolitical turbulence in their strategic plans. But with many still unsure about their AI risk management processes, now is the time to revisit and refine strategies to help them navigate the business landscape that continues to be volatile and unpredictable.”

To read the full report, please visit: ey.com/CEOOutlook.

EY Northern Ireland to create 1,000 new jobs in the region over the next five years

Professional Services firm EY today announced the creation of 1,000 new jobs in Northern Ireland over the next five years in a move that will bring the total EY headcount to 1,900 in the region. To support this growth EY will establish a hub in the North West to attract talent from across the region.

This announcement by EY, a global leader in assurance, tax, consulting as well as strategy and corporate transactions, is supported by Invest Northern Ireland and the Department for the Economy.

The roles will be filled by a mix of experienced candidates, recent graduates and school leavers in areas such as cyber security, data analytics, cloud computing, Artificial Intelligence and other emerging technologies, risk, tax, audit and as well as business consultancy.

As part of today’s announcement, EY Northern Ireland is committing to work with the Department for the Economy to operate an Assured Skills Academy Programme that will deliver a strong pipeline of new talent for EY in specific areas such as cyber security, data analytics, among others. The Assured Skills Academy Programme will focus on individuals such as those seeking to return to work following a career break, those wishing to change career, or recent graduates looking for an alternative route into professional services.

Announcing the investment at the Northern Ireland Investment Summit in Belfast today, Rob Heron, EY Northern Ireland Managing Partner, said: “Today is an exceptionally proud day for all of us in EY Northern Ireland as we announce a thousand new jobs in the region over the next five years and aim to more than double our headcount to 1,900 in the years ahead.

“Thanks to our partnership with the Department for the Economy and Invest Northern Ireland, we have been able to create this pipeline of jobs and skills development opportunities that we are announcing today.  Whether you are a college graduate, someone looking to advance or change your career, or you are ready to re-enter the workforce following a career break, EY’s Assured Skills Academy Programme will offer you an opportunity to acquire new skills and to join a world class team here in EY Northern Ireland.

“Our firm has been experiencing increased demand across all our business areas in recent years as clients turn to us in growing numbers to help them with their most complex and strategic problems. That is why we are so focused on ensuring that we continue to have the right access to great talent in the region across a diverse range of skillsets and specialisms. Our EY core values of diversity, social equity, and inclusiveness will be at the heart of these new employment opportunities and that is something we are incredibly proud of. “

Frank O’Keeffe, EY UK & Ireland Managing Partner, Markets and Managing Partner EY Ireland: “In EY we are passionate about supporting our clients by investing heavily in our highly skilled and diverse workforce and that is why days like today are so special for us.  EY has built an incredible business in Northern Ireland over decades, proudly providing a superb service to a broad range of clients across the island of Ireland, the United Kingdom and our global network. These 1,000 new jobs will help to strengthen Northern Ireland’s reputation as home to world-class universities and fantastic local talent and they will help to spotlight the region as an attractive hub for global business and future international investment.

There is fierce competition for jobs and investment globally but what set Northern Ireland apart on this occasion was the quality of local talent here as well as the innovative growth mindset displayed by our Northern Ireland team and our incredible clients.  The support received from Invest Northern Ireland and the Department for the Economy played an important role in making today happen and collectively we are very proud of the impact we know these 1,000 new jobs will have on the local economy.” 

Hywel Ball, EY UK Chair and UK and Ireland Managing Partner: EY is very proud to announce the creation of 1,000 new Jobs in EY Northern Ireland over the next five years. Today’s jobs announcement is a reflection of our commitment to accelerate the growth of our Northern Ireland practice in a way that will bolster the regional economy.  The support from Invest Northern Ireland and the Department for the Economy was an important component when it came to our decision to choose Northern Ireland as the location for this significant investment, as was the access we have here to an incredible talent pool, as well as the potential and ambition of our Northern Ireland practice.”   

Mike Brennan, DfE Permanent Secretary, said “This announcement of 1,000 new jobs by EY is excellent news for the local economy and a further endorsement of Northern Ireland as a rising global player in the fintech and professional services sector. This investment by EY strongly aligns with the innovation and inclusivity objectives of the Department’s 10X Economic Vision and will provide opportunities for individuals across Northern Ireland to enter the sector.

“My Department’s Assured Skills Academies will assist in filling 351 of these jobs across a range of roles and skills areas including Data and Analytics, Cyber Security, Procurement and Commercial Contract Management and Project and Programme Management. Assured Skills Academies have a track record of equipping participants with the skills employers need to flourish and grow. Furthermore, participants on these Assured Skills Academies who complete the training are guaranteed an interview for a role with EY and will be strongly positioned for success.”

Welcoming the investment, Mel Chittock, Interim CEO of Invest NI, said: “Over many years, Invest Northern Ireland has developed a strong, strategic partnership with EY’s local management, and we are delighted that the firm has chosen Northern Ireland against other competitive locations globally for this significant investment.

“It is clearly aligned with the objectives of the Department for the Economy’s 10X Economic Vision as securing this major mobile investment will contribute to a more regionally balanced economy by establishing a regional hub outside Belfast and a clear commitment by EY to positively provide opportunities for the economically inactive. It will also further raise the standing of Northern Ireland on the global stage, positioning it as a fintech and professional services powerhouse and helping to develop the innovation capabilities on which our future economy will be based.”

Consumers remaining frugal and resilient to cope with cost-of-living pressures

Consumers are continuing to reign in their spending amidst a challenging cost-of-living environment globally, with 94% of consumers now worried about the rise of living costs as they continue to navigate inflation. Affordability is the leading concern for consumer respondents to the 12th edition of the EY Future Consumer Index (FCI) increasing by 10 percentage (to 35%) points since October 2022, with increases in the cost of groceries, energy and fuel areas of significant concerns to consumers.

Colette Devey, EY Ireland Partner and Consumer Products and Retail Lead, says: “This latest edition of the EY’s Future Consumer Index reveals that cost of living and financial and health pressures are taking precedence with consumers, while more altruistic concerns for the planet or society are not being prioritised to the same degree.

“Value for money emerges as the key areas of focus for consumers from the report, something we know is a significant issue of concern here in Ireland also. Consumers across all income bands are more frugal in their spending, with almost two thirds reporting that private label products satisfy their needs just as well as branded products (65%) or can help them save money (63%). While customers continue to focus on value and are cost-conscious, we are also seeing that some groups are continuing to prioritise holidays with almost four in ten (38%) higher income consumers intending to spend more in this area over the coming months.

“The focus on affordability is also helping to drive sustainable behaviours, with large majorities of consumers indicating that they prefer to repair rather than replace items (67%), are recycling or repurposing products after use (79%,) and are switching to sustainable alternatives in the products they purchase (60%).

“We are seeing the prioritisation of affordability and health being reported by consumers irrespective of age, income profile or location, demonstrating that these are wider macro-trends as consumers globally continue to deal with the lingering impact of the pandemic, supply chain disruption and inflationary issues and ongoing geopolitical uncertainty.”

Technology is intrinsically part of consumer life

The EY Future Consumer Index reveals almost half (46%) of consumer respondents rely on technology to manage their daily lives. In light of this, it is not surprising then that data theft and security breaches are an issue of concern for a majority of respondents, most notably ID theft (55% very concerned), data/security breaches (53% concerned) or downloading a virus (52%). Consumers are also wary about what it happens to their data, with 53% concerned that companies may sell their personal information to a third party. Somewhat paradoxically, however, they are also willing to share personal data if it provides value for them, with two thirds (66%) willing to exchange their data for personalised recommendations for cheaper alternatives to a product, and six in ten (60%) are willing to share data for a completely customised online experience.

This growing reliance on technology and its outputs and recommendations are also shaping purchase decisions and overall consumption. Across mainstream technologies, the data reveals almost half of consumer respondents (46%) have used online grocery delivery services in the last three months, a 12-percentage point rise since June 2022. Fifty-three percent of respondents have socialised with friends and family over video platforms, a significant 14 percentage point rise since June 2022, and 62% now listen to audio streams, a huge 17 percentage point increase from June 2022. Emerging technologies also saw a sharp uptake, with more than double the number of consumer respondents globally now using virtual multi-user platforms when compared with June 2022.

Colette Devey says: “Consumers have become habitual users of digital technology, becoming incrementally more reliant on it to provide them with ways to make life easier, save money, save time, work from home and reduce their environmental impact. Consumer attitudes toward technology are evolving just as rapidly as the technology itself, as people look for a fair exchange of value. Businesses must foster a relationship with their customers around technology based on trust, respect and value. Failure to do so will damage relationships in the long term.”

Consumers turn away from brands in search of affordability

With today’s economic uncertainties showing slow signs of easing, 92% of respondents are concerned with their country’s economy currently. Consumers are somewhat more positive about the longer term outlook, however, with almost half (48%) expecting to feel more positive in three years’ time.

Consumer respondents are taking action to reduce spending in many areas of their lives, with more than a third (36%) planning to spend less on clothes, 44% expecting to buy less take-away food and nearly half (49%) planning only to spend on essential products. Affording the essentials also remains a challenge for many consumers. More than three quarters (79%) feel prices for food have increased in the past three to four months and 74% have noticed some brands have reduced their pack sizes without reflecting changes in the price, otherwise known as “shrinkflation”

The data indicates brands are no longer the only way to communicate status for the majority of consumers as 62% of respondents globally don’t feel the need to keep up with the latest fashion trends and half would now consider private label for clothing, shoes and accessories. A large proportion (67%) now prefer to repair rather than replace their possessions, challenging the traditional consumer desire of having to always own the latest things. 55% of consumers globally say brands are no longer important and 29% of respondents say that they have switched from brands to private label.

Colette Devey says: “Consumers are remaining frugal and resilient to cope with cost-of-living pressures. They are reporting the value they receive from brands diminishes due to price increases and in some cases shrinkflation. Consumers are responding by switching away from brands, reducing their list of essentials and cancelling subscriptions to maximise budgets. While many Irish households may feel that there are many factors outside their control, they should recognise that there are a number of ways in which they can take control of their spending, including exploring private label offerings, seeking to take advantage of on-the-floor and at-the-till discounts and to shop around and across channels for the best value.”

The latest edition of the EY Future Consumer Index is available at: ey.com/FutureConsumerIndex12

 

EY Launches Managed Cyber Security Services

EY Ireland today announced the launch of its Managed Cyber Security Service, specifically tailored to support Irish SMEs and other businesses globally to defend against cyber security threats and attacks by reducing the cost and expertise barriers preventing many organisations from addressing their urgent cyber security needs.

Cyber-attacks are becoming more sophisticated and frequent as the abundance of connected devices means it is becoming ever more challenging for businesses, particularly those of a smaller scale, to keep up with the constantly shifting cyber threat.

Puneet Kukreja, EY Ireland Consulting Partner and Head of Cyber Security said, “A common myth is that a fully integrated in-house cyber infrastructure or a fully managed outsourced security capability is the only option. This can be resource heavy particularly for SMEs, leaving many businesses on the starting blocks where their cyber security journey is concerned.”

Results from EY Ireland’s recent Tech Leaders and CFO Outlook surveys point at cost and resource barriers, plus assumptions regarding levels of complexity as the key factors causing a failure-to-launch where cyber-preparedness is concerned.

Technology leaders acknowledge cyber-attacks as a growing external threat, with one in three citing cybersecurity risks as a challenge, however, cyber defence for their own businesses does not feature on their list of strategic and investment priorities. Organisations that experience a cyber breach invest in defences while others often divert spend elsewhere. These survey results show that many businesses are leaving themselves open to attack in a fast-paced digital world, where reliable cyber security protection is now more important than ever.

EY Ireland’s new Managed Cyber Security Operations Centre (MSOC) – that includes specialist services across the full spectrum of cyber – can support businesses who have been slow to embark on their cyber preparedness journey often due to misconceptions around expected technical complexity, lack of in-house skills and difficulty estimating cyber investment requirements. With SMEs these barriers become even more pronounced as they can be vulnerable to smaller budgets and no specialised security function to provide adequate cyber protection.

“The reality is that it is significantly more cost effective to protect against threats, than to react after the incident. Treating cybersecurity as an expense rather than an investment is counter-productive, leaving businesses wide open to attack. Modern, cloud-based infrastructure and open AI means that a single stolen credential or compromised account can be used by bad actors to launch an attack,” added Kukreja.

Insights from recent EY CTO and CIO research chimes with EY client feedback that, opting for tailored, outsourced Managed Cybersecurity Services allows businesses to overcome barriers, close internal resource and technology gaps and keep costs down, to clear the path towards accelerated growth.

EY Technology Leaders Outlook 2023

Irish technology leaders are investing heavily as they focus their organisations on accelerating growth amidst global economic disruption, a dynamic landscape of rapidly advancing technology and shifting operating models. That’s a key finding of EY Ireland’s Technology Leaders Survey 2023, which also found that leaders are prioritising the development and retention of key talent in their organisations as they put people at the heart of the digital transformation journeys.

More than two-fifths (44%) of the 150 senior technology leaders surveyed by EY say they are currently planning or executing a digital transformation or change programme, indicating significant room for growth across digital and IT spend and talent acquisition. The momentum Irish tech leaders are delivering during their companies’ transformation journeys is supported by resilient IT budgets with tech leaders indicating they expect to increase (46%) or maintain (49%) current levels of spending over the next two years.

When it comes to staffing, the picture is also bullish, with 93% of Irish technology leaders planning to either increase or maintain current IT staffing levels, and only 2% saying they expect to reduce IT staff headcount over the next two years. In fact, the IT skills shortage remains a top concern for technology leaders, with more than a third (32%) naming it as the number one challenge to growth over the next two years, placing it above global recession fears (27%) and supply chain disruption (12%).

Irish tech leaders are firmly focused on delivering long term value for their organisations through technology but are slow to devote resources to what some see as nascent technologies. Instead, they are investing in the technologies seen as most likely to deliver immediate value, such as process automation (46%), data analytics (39%) and the Internet of Things (IoT) and 5G (38%).

39% of leaders consider data analytics a critical technology for driving value creation and yet just 11% of respondents say their organisation is data-centric – that is, fully leveraging data analytics capabilities to be predictive, drive innovation and continually improve every aspect of the business.

“The focus for businesses in Ireland right now is firmly on adding value and future growth, and that is very welcome. Cost reduction is almost a by-product. It’s clear that Irish technology leaders do not view transformation programmes through a pure technology lens and are instead seeing them as enablers of growth and value creation across the entire organisation. But huge opportunities still remain when it comes to technology adoption and innovation, especially in relation to managing and harnessing the power of data, ” said Ronan Walsh, Consulting Partner and Head of Technology Consulting at EY Ireland.

Continuing Journey ahead for cloud adoption

Enterprise-wide cloud adoption remains some way off – indeed, only 15 per cent of respondents indicate that all their IT systems are already on the cloud, while only 26 per cent are pursuing a full cloud strategy and in the process of migrating.

“Irish organisations recognise the need to migrate their core systems to more modern, cloud-based IT architectures but they also know this transition will not be easy. While not without risk, it is ultimately a high reward journey that requires buy-in from the very top of the organisation. We need to see more Irish organisations leveraging their data to maximum effect given that almost 39 per cent of Irish leaders consider data analytics such a critical technology for driving value. Irish organisations must capitalise on the power of data, or we risk falling behind our global counterparts when it comes to innovation,” added Ronan Walsh.

Value drivers key to investment plans; Metaverse and Blockchain not a big focus in the near term

Interestingly, a number of technologies which have attracted and generated significant interest over recent years, such as Blockchain, the Metaverse, 3D Printing and Quantum Computers, are viewed by Irish tech leaders as capable of delivering some value, however, widespread adoption is still some way off.

Colin Reilly, EY Ireland Partner, SAP Practice Leader and Technology Consulting CIO said “This may well be a case of hype failing to survive first contact with reality. We are already seeing some of the main proponents of the metaverse pulling back on investments in the new virtual realm and the paucity of use cases for the majority of businesses will probably see it remain a fringe technology for some time to come. That is not to say that it will not deliver value to organisations at some point in the future, but for the moment at least, that point seems a long way off.”

EY CFO Survey 2023 – Cost cutting, cybersecurity, automation and talent are among top strategic priority areas

The latest EY CFO Survey reveals that Irish CFOs are increasingly grappling with more risk factors amid increasing cyber threat levels, supply chain pressures triggered by geo-political events, and rapid digital disruption. The survey, launched to coincide with EY’s annual CFO Summit, also highlights the priorities identified by finance leaders from a variety of sectors, needed to drive efficiencies and support data-led transformation amid mounting challenges on the back of the ongoing energy crisis and recessionary pressures.

These findings are interesting considering the rapid evolution of the CFO’s role in recent years. According to the survey, 61% say their remit has changed to drive strategic automation within the finance function in the past two years.

Cybersecurity tops investment priority

Cybersecurity is moving up the business agenda of the 151 Irish CFOs surveyed by EY, with 60% of respondents having increased investment in cybersecurity tools and technology over the past two years. A similar proportion (59%) over the period have invested in training for employees to improve cybersecurity in their finance functions. The cost of a cyber breach is a constant concern and 30% of respondents have either stepped up their involvement in managing cybersecurity or have increased their organisation’s insurance.

The increased focus on resilience and cybersecurity awareness among finance leaders reflects the growing threat level, the increase in the volume and severity of cyberattacks, and the knock-on significant financial and operational risks this represents for businesses.

ESG agenda: Responsibility versus opportunity

The Irish corporate ESG agenda strikes more of a mixed picture. Despite over half (54%) of respondents claiming their finance role now includes a greater focus on ESG and non-financial reporting, only 15% of the CFOs surveyed claimed that building skills in non-financial/ESG reporting is a key priority for the next five years. 43% of the respondents cite sustainability regulatory compliance as a key area of focus for the next two years, while just 2% say non-financial and ESG reporting will be a key area of focus for the next 24 months.

ESG in the eyes of Irish finance leaders is viewed as a responsibility rather than a business opportunity and the survey findings suggest that ESG and non-financial reporting have fallen down the critical list. Only 6% of the respondents say increasing the sophistication of non-financial reporting is one of the top strategic areas of focus over the next five years, down from 15% in 2022. Just 10% see opportunities in sustainability and decarbonisation as a driver of growth in the year ahead. Spiralling energy costs, inflationary pressures, and wider economic uncertainty may explain the shift in focus.

There are more positive signs in relation to the general direction of travel on non-financial reporting, with 44% of respondents claiming they have increased the sophistication of non-financial reporting over the past year.

“The environmental, social and corporate governance agenda in Irish boardrooms paints a mixed picture this year. ESG cannot be divorced from the broader strategic direction of the business and ESG credentials and sustainability performance will become key competitive differentiators in the near term. This reflects the need for culture change in many organisations while finance teams are still working their way through what non-financial reporting means for their businesses. We anticipate much greater emphasis on building skills in this critical area in the coming years,” said Derarca Dennis, Assurance Partner at EY Ireland.

Automation and talent retention other areas of focus

There is an increasing belief on the part of CFOs that talent shortages can be alleviated, at least in part, through the automation of certain tasks and processes, with 37% saying automating manual tasks and processes will be a key strategic focus over the next five years. This emerged as the second highest priority on after cost reductions/increasing efficiencies for the period.

There is clearly some way to go, though, in terms of automation with 35% of the respondents claiming that it is not leveraged in their organisation at all. Among those who do, transaction processing; internal audit and risk; and consolidation and reporting are key areas where automation is prevalent.

Talent and retention continue to be a significant disruptor for Irish financial leaders, with 40% of the respondents identifying upskilling current staff as a priority for driving growth in the coming year, while a further 34% cited investing in new talent as the best way to drive growth.

Recruitment is clearly a critical success factor, with 44% of respondents citing talent shortages and talent retention as a key challenge to reaching the desired level of growth over the next five years.

On average expected growth for the year ahead is 12%, with 40% saying they are unsure yet of their expected growth.

“CFOs are increasingly playing a strategic role in their organisations beyond the narrow confines of the traditional finance function as their roles are becoming even more encompassing. The finance function had already evolved to become more involved in other areas of the business and that shift was accelerated by the pandemic. The heightened strategic importance of the role should help attract a new generation of finance professionals to support growing Irish businesses,” said George Deegan, Assurance Partner at EY Ireland.

Reflecting on the challenges and opportunities, 64% of Irish CFOs claim to be optimistic about the economic outlook and business prospects for the next 12 to 24 months. Just 23% say they are a little or very pessimistic.